Tax changes to allow workers keep more of their earnings as well as moves towards making childcare more affordable are set to be priorities as preparations ramp up for October’s budget.
Tánaiste and Minister for Finance Simon Harris will highlight the moves during an address to the National Economic Dialogue (NED) in Dublin Castle today.
However, it comes as Minister for Public Expenditure Jack Chambers will tell the event he expects talks on a new public sector pay agreement to be “challenging” given global volatility. He will add that while the Government wants a deal, it cannot come “at any price”.
Representatives from unions, business and the voluntary sector will gather for the NED – essentially the starting point for deliberations leading to this autumn’s budget.
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In advance of the dialogue, the Irish Congress of Trade Unions (Ictu) warned that the Government “must deliver a budget for workers or risk industrial unrest”.
This year’s budget comes at a time of considerable economic uncertainty caused by the war in the Middle East and subsequent rising energy prices.
On Sunday, Harris expressed his hope that a peace deal “may finally come to pass in the coming hours”. He added that the greatest economic intervention the Irish and global economy could see was “de-escalation” of hostilities in the Middle East.
In his address to the NED, it is expected Harris will say that “successive budgets have increased the point at which workers enter the higher rate of income tax, helping people keep more of what they earn”. He is also expected to say: “. . . as we prepare Budget 2027, we will consider further increases in that threshold as a practical way of ensuring wage growth translates into higher take-home pay.”
The Coalition has given a commitment to reduce childcare costs to €200 per month per child over the lifetime of the Government. In recent weeks, Minister for Children Norma Foley has said she hopes to make progress to that end in Budget 2027.
In his NED address, Harris will identify childcare affordability as a significant pressure facing families and say parents “can face difficult choices between remaining in work and providing care at home. That is why Government must remain committed to making childcare substantially more affordable for working families.”
He will also highlight the importance of keeping control of the public finances at a time of increasing global uncertainty.
Speaking in advance of the NED, Ictu general secretary Owen Reidy referenced anger among unions over the failure to index tax allowances in the last budget, the VAT cut for the hospitality sector and supports for hauliers made by Government in the aftermath of April’s fuel protests.
“Budget 2027 is a defining test for this Government,” he said, adding it should “deliver a package of measures that actually supports workers” alongside investment in public services and infrastructure.
Meanwhile, with the current public pay agreement due to expire at the end of the month, Chambers is to instruct his officials within days to begin exploratory talks with the Ictu and others to see if there is a basis for entering into formal negotiations on a new deal.
He will tell the NED he hopes a “reasonable solution on public pay can be achieved”.
In his address, he is expected to say Ireland’s system of collective agreements in the public service has sought to manage public-service pay in “a balanced way that is reasonable and fair to both public servants and the taxpayer”.
Chambers will tell the event “this will continue to be our objective as we embark on discussions” which he predicted would be “very challenging” against a backdrop of an “external environment” that is “very volatile”.
He will say the Government will “approach any process in good faith and with the objective of reaching a fair agreement” while also noting that “as ever, it cannot, nor should it be, a question of agreement at any price”.
Union leaders will be eager to hear what the Government believes is possible in any new pay deal and what parameters it wants to set for talks.
Siptu general secretary John King has said he wants to see above-inflation pay growth intended to address cost-of-living increases. Unions argue that these increases have been well ahead of the consumer price index, with particular pressures in relation to food, fuel and housing costs.
